Secretary of State Colin Powell and his Mexican counterpart Foreign Secretary Luis Ernesto Derbez Wednesday moved to dampen expectations of an early agreement between the two countries on the status of millions of Mexicans now in the United States illegally. But they said incremental progress on the issue is possible.

There were high hopes when the administrations of President Bush and Mexican President Vicente Fox were new three years ago that the two neighbors could come to some agreement on the status of undocumented Mexican workers in the United States.

But the process was dealt a setback amid the tighter U.S. immigration and visa rules put in effect after the terrorist attacks in New York and Washington in September 2001. And with a U.S. presidential election looming next year, both two sides are downplaying expectations of a breakthrough.

At a joint news conference with Mr. Derbez, capping the 20th annual meeting of the U.S.-Mexican Bi-national Commission, Mr. Powell said the two presidential remain committed to migration reform but that any progress now will be limited.

"We were very candid with each other about the difficulties we have encountered as a result of 9-11 and some of the actions we had to take to ensure that our homeland was secure," he said. "But now that we are on the other side of 9-11, we're going to look for ways to move forward step-by-step to make sure that we can make it safe, legal and in other ways respectful of our need for labor and the desire to make sure that we treat those who come to our country in a very appropriate way, and to do everything we can to regularize this traffic back and forth."

Mr. Derbez, for his part, spoke hopefully of several proposed laws now before the U.S. Congress, one of which would create a so-called "temporary worker" program that could regularize the status of at least some of the Mexican migrants, believed to number between three and four million.

But like Mr. Powell, the Mexican foreign secretary advised against excessive expectations, likening the process now underway to construction of a building:

"The dream we're talking about is how to find the creation of the structure that will bring migration into the correct shape. That takes time, that takes also the definition and design, and it means that you have to start first thinking what you do," Mr. Derbez said. "Then, once you have a clear definition of where you want to go, what kind of aspects you will have to put together, then you starting digging and slowly building the foundations so that you can have a building that will not collapse at the end when you are ready to inhabit that building. This is exactly the way that at least I see, and I'm sure Mr. Powell also, the way that we are doing right now on the process of migration."

Mr. Derbez said the two governments are now engaged "at the highest possible level" on the migration issue and said that, along with the moves in the U.S, Congress, constitute progress, even if people may not see it that way.

The U.S.-Mexican commission did yield at least one agreement, for the stationing of U.S. Peace Corps workers in Mexico for the first time in that organization's 42-year history.

Under the accord, an initial group of U.S. volunteers will go to Mexico next year to work on information technology, small business development and science projects.